Microsoft announced late September 2 that it would be acquiring Finnish mobile phone manufacturer Nokia’s handset division in a $7.2 billion deal. The deal represents an entry into the smartphone hardware business for Microsoft, as well as a strengthened commitment to building market share for the company’s Windows Phone OS. For developers, it could also mean a renewed focus on what has traditionally been a lower priority mobile environment.
The acquisition deal will shift all of Nokia’s devices and services unit to Microsoft, along with 32,000 employees and licenses for all of of Nokia’s patents. According to Microsoft CEO Steve Ballmer, the deal “cements the original partnership” the two companies began two and a half years ago. Nokia currently accounts for more than 80 percent of worldwide Windows Phone sales, although the operating system makes up just 3.7 percent of all smartphone sales, according to IDC. With the acquisition, Microsoft says that it aims to boost the Windows Phone market share to 15 percent of smartphones by 2018.
“By bringing our teams together, we can increase our share in smart devices through faster innovation, through better products and through unified branding and marketing,” Stephen A. Elop, who has been serving as Nokia CEO for the past three years, said in a media conference call.
One specific area in which Microsoft hopes the change will be successful in building a market is in converting current Nokia feature phone users into Windows Phone smartphone customers, Elop said. Microsoft, which will continue to fully support its Android and iOS offerings, is eager to push services such as Skype, Bing, Xbox, SkyDrive and Office to a broader customer base, according to Ballmer.
Expanding the Windows application ecosystem
At the same time, one of the challenges Windows Phone has faced in the past has been attracting developer interest. A recent Forrester study found that Windows Phone is a top five priority for less than 50 percent of developers, as compared to 84 percent for Android and 77 percent for iPhone, respectively. Ballmer acknowledged that the Windows application ecosystem currently has some shortcomings but suggested that growing market share will help draw new developers.
“Investment in Windows Phone and the Windows ecosystem should help raise the tide of everything that we do,” he said in the conference call. “And we know that, that rising tide attracts application developers, and we recognize the gaps we have in application ecosystem today, particularly on Windows Phone.”
Although it’s hard to say at the moment how the acquisition will ultimately affect the OS, outside analysts offered similar takes, explaining that Windows Phone could be a legitimate challenger to Android and iOS if Microsoft could strengthen its app offerings and developer support. With more users will come more demand for a Windows experience, as well as more developers and a richer app ecosystem, Gartner’s Tracy Tsai told PC World. At the same time, 15 percent market share may still not be enough to entice many developers, CNET’s Dan Farber suggested.
By signaling its commitment to continuing to expand its Windows Phone offerings, however, Microsoft has given a strong signal to mobile developers that Windows should be among their priorities as they roll out new applications. Although the change won’t happen immediately, it’s very possible that many development teams will decide to give the operating system a second look as Windows pushes to expand its user base.
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